[Federal Register Volume 64, Number 204 (Friday, October 22, 1999)]
[Rules and Regulations]
[Pages 57356-57359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27673]



[[Page 57355]]

_______________________________________________________________________

Part VI





Department of Education





_______________________________________________________________________



34 CFR Part 668



Student Assistance General Provisions; Final Rule

  Federal Register / Vol. 64, No. 204 / Friday, October 22, 1999 / 
Rules and Regulations  

[[Page 57356]]



DEPARTMENT OF EDUCATION

34 CFR Part 668

RIN 1845-AA07


Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: We amend the regulations governing student eligibility for the 
student financial assistance programs authorized under title IV of the 
Higher Education Act of 1965, as amended (title IV, HEA programs). 
These programs include the Federal Pell Grant Program, the campus-based 
programs (Federal Perkins Loan, Federal Work-Study (FWS), and Federal 
Supplemental Educational Opportunity Grant (FSEOG) Programs), the 
William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal 
Family Education Loan (FFEL) Program, and the Leveraging Educational 
Assistance Partnership (LEAP) Program (formerly called the State 
Student Incentive Grant (SSIG) Program). The regulations implement 
changes made to the Higher Education Act of 1965, as amended (HEA), by 
the Higher Education Amendments of 1998 (Public Law 105-244, enacted 
October 7, 1998) (1998 Amendments).

DATES: These regulations are effective July 1, 2000.
    Implementation Date: The changes to Secs. 668.32 and 668.38 reflect 
statutory provisions that already are in effect. Institutions may use 
these regulations prior to July 1, 2000 as guidance in complying with 
those statutory provisions.

FOR FURTHER INFORMATION CONTACT: Lloyd Horwich, U.S. Department of 
Education, 400 Maryland Avenue, S.W., ROB-3, Room 3045, Washington, 
D.C. 20202-5344. Telephone (202) 708-8242. If you use a 
telecommunications device for the deaf (TDD), you may call the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: On July 16, 1999, we published a notice of 
proposed rulemaking (NPRM) in the Federal Register (64 FR 38504) 
proposing to amend the regulations governing student eligibility for 
the title IV, HEA programs. In the preamble to the NPRM, we discussed 
the following proposed changes:
     Amending Sec. 668.32(e) to allow a student who completes a 
secondary school education in a home school that is treated as a home 
school or private school under State law to be eligible to receive 
title IV, HEA program funds.
     Amending Sec. 668.32(h) to provide that a student file his 
or her Statement of Educational Purpose with the Department.
     Amending Sec. 668.32(k)(7) to reflect the name-change of 
the SSIG program to the LEAP program.
     Amending Sec. 668.32 by adding as Sec. 668.32(l) a cross-
reference to the student eligibility criteria concerning drug 
convictions described in proposed Sec. 668.40.
     Amending Sec. 668.38 to provide the conditions under which 
a student enrolled in telecommunications courses will not be considered 
enrolled in correspondence courses.
     Adding Sec. 668.40 to provide the conditions under which a 
student who has been convicted under Federal or State law of possession 
or sale of illegal drugs will be ineligible to receive title IV, HEA 
program funds.
    There are no significant differences between the NPRM and these 
final regulations, except that these final regulations clarify the 
status under Sec. 668.40 of determinations or adjudications for 
possession or sale of illegal drugs arising out of a juvenile 
proceeding.

Discussion of Student Financial Assistance Regulations Development 
Process

    The regulations in this document were developed through the use of 
negotiated rulemaking. Section 492 of the HEA requires that, before 
publishing any proposed regulations to implement programs under title 
IV of the HEA, we obtain public involvement in the development of the 
proposed regulations. After obtaining advice and recommendations, we 
must conduct a negotiated rulemaking process to develop the proposed 
regulations. All proposed regulations must conform to agreements 
resulting from the negotiated rulemaking process unless we reopen that 
process or explain any departure from the agreements to the negotiated 
rulemaking participants.
    These regulations were published in proposed form on July 16, 1999 
in conformance with the consensus of the negotiated rulemaking 
committee. Under the committee's protocols, consensus meant that no 
member of the committee dissented from the agreed-upon language. We 
invited comments on the proposed regulations by September 14, 1999, and 
18 comments were received. An analysis of the comments and of the 
changes in the proposed regulations follows.
    We discuss substantive issues under the sections of the regulations 
to which they pertain. Generally, we do not address technical and other 
minor changes and suggested changes the law does not authorize us to 
make.

Analysis of Comments and Changes

Section 668.32  Student Eligibility-General

Home-schooled students
    Comments: A number of commenters specifically supported our 
statement in the NPRM that a student who completes a secondary school 
education in a home school setting that is treated as a home school or 
private school under State law simply must satisfy the home-school 
completion requirements of the State in which the student was home 
schooled to be eligible for title IV, HEA program funds.
    Changes: None.
    Comments: A number of commenters specifically supported our 
statement in the NPRM that the Secretary will allow a home-schooled 
student to self-certify his or her eligibility in the same way a high 
school graduate or General Equivalency Degree (GED) recipient may.
    Changes: None.
    Comments: The Department should clarify the meaning of ``exemption 
from compulsory attendance requirements under State law'' in proposed 
Sec. 668.32(e)(4)(ii).
    Discussion: ``Exemption from compulsory attendance requirements 
under State law,'' means that the State does not consider a home-
schooled student to be in violation of the State's truancy laws.
    Changes: None.
    Comments: The Department should clarify whether home-schooled 
students must take an ability-to-benefit test to be eligible to receive 
Title IV, HEA program funds under proposed Sec. 668.32(e).
    Discussion: Home-schooled students who satisfy the requirements of 
Sec. 668.32(e)(4) are eligible to receive title IV, HEA program funds. 
They are not required to take an ability-to-benefit test.
    Changes: None.

Section 668.38  Enrollment in Telecommunications and Correspondence 
Courses

    Comments: The Department should clarify the status under proposed 
Sec. 668.38 of students enrolled in telecommunications courses at 
institutions described in section

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521(4)(C) of the Carl D. Perkins Vocational and Applied Technology 
Education Act.
    Discussion: Students enrolled in telecommunications courses at 
institutions described in section 521(4)(C) of the Carl D. Perkins 
Vocational and Applied Technology Education Act are considered to be 
enrolled in correspondence courses.
    Changes: None.

Section 668.40  Suspension of eligibility for drug-related offenses

    Comments: The Department should clarify that the provisions of 
Sec. 668.40 apply only to a student's eligibility for title IV, HEA 
program funds for award years beginning on or after July 1, 2000.
    Discussion: The provisions of Sec. 668.40 apply only to a student's 
eligibility for title IV, HEA program funds for award years beginning 
on or after July 1, 2000. However, convictions that occur before July 
1, 2000 may affect a student's eligibility for title IV, HEA program 
funds as of July 1, 2000. For example, a student convicted for the 
first time for possession of a controlled substance on February 1, 2000 
will be ineligible from July 1, 2000 (the effective date of the 
regulations) until February 1, 2001 (one year from the date of 
conviction).
    Changes: None.
    Comments: Clarify whether a conviction for multiple counts of 
possession or multiple counts of sale is considered a single 
conviction.
    Discussion: A conviction for multiple counts of possession or 
multiple counts of sale is considered a single conviction. Also, a 
determination or adjudication arising out of a juvenile proceeding is 
not a conviction for purposes of this regulation.
    Changes: Section 668.40(a)(2) is changed to reflect the above 
clarification concerning juvenile violations.
    Comments: The Department should clarify the meaning of 
``indefinite'' under Secs. 668.40(b)(1)(iii) and (b)(2)(ii), concerning 
the ineligibility period of a student convicted three or more times for 
possession of illegal drugs or two or more times for sale of illegal 
drugs.
    Discussion: For purposes of this regulation, ``indefinite'' means 
permanent, unless (1) the student completes an approved drug 
rehabilitation program described in Sec. 668.40(d) or (2) convictions 
are reversed, set aside, or removed from the student's record so that 
the student has fewer than three convictions for possession and fewer 
than two convictions for sale remaining on his or her record, in which 
case the student's ineligibility period would be determined by the 
number and type of remaining convictions.
    Changes: None.
    Comments: An institution should not be required to be involved in 
determining a student's eligibility for title IV, HEA program funds 
under this regulation.
    Discussion: We will not require institutions to question their 
applicants for title IV, HEA program funds about drug convictions. We 
intend to use the aid application process--the Free Application for 
Federal Student Aid (FAFSA) and the Student Aid Report (SAR)--to 
collect the necessary information from applicants. However, we will 
encourage students to notify their financial aid office if their 
eligibility status changes.
    Changes: None.
    Comments: An institution should not be liable for funds disbursed 
to a student when the student is ineligible under this regulation and 
the institution is not aware the student is ineligible.
    Discussion: An institution will not be liable for funds disbursed 
to a student who is ineligible under this regulation if the institution 
is unaware at the time of disbursement that the student is ineligible.
    Changes: None.
    Comments: Students who regain their eligibility under this 
regulation during a payment or enrollment period should be eligible for 
aid for the entire payment period (in the case of Pell Grants, FSEOG, 
FWS, or Perkins Loans) or the entire enrollment period (in the case of 
Direct or FFEL Loans). Similarly, students who lose their eligibility 
during a payment or enrollment period should not forego funds until the 
beginning of the next payment or enrollment period.
    Discussion: Students who regain eligibility under this regulation 
during a payment period will be eligible to receive Pell Grants, FSEOG, 
FWS, or Perkins Loans for the entire payment period, and will be 
eligible to receive Direct or FFEL Loans for the entire enrollment 
period.
    However, students who lose eligibility during a payment period will 
be immediately ineligible to receive subsequent disbursements of any 
title IV, HEA program funds, and will be required to repay any title 
IV, HEA program funds that they receive after losing their eligibility. 
Those students will not be considered to have been ineligible for funds 
disbursed to them prior to their loss of eligibility. Institutions will 
not have to recalculate students' awards on a pro-rata basis.
    Changes: None.
    Comments: Students should be allowed to self-certify both their 
eligibility under this regulation for title IV, HEA program funds and 
the renewal of their eligibility during a payment period.
    Discussion: We will allow students to self-certify their 
eligibility for title IV, HEA program funds on the FAFSA or SAR. We 
also will allow institutions to disburse funds to students who regain 
eligibility during a payment period or enrollment period, based on 
students' self-certification to the institution. Students may not self-
certify their eligibility based on projected eligibility dates (i.e., 
students who will regain eligibility during a payment period may not 
self-certify at the beginning of the payment period that they are 
eligible, even though as discussed above, students who regain 
eligibility during a payment period will be eligible to receive funds 
for the entire payment period or enrollment period, as appropriate), 
nor may institutions disburse funds based on projected eligibility 
dates, but institutions will not be responsible for verifying the 
accuracy of students' self-certifications.
    Changes: None.
    Comments: The regulation should not be overly restrictive in 
defining what is an acceptable drug rehabilitation program.
    Discussion: We agree, and believe that Sec. 668.40(d) addresses 
this concern.
    Changes: None.
    Comments: The Department should provide individualized advice to 
students on the meaning of this regulation.
    Discussion: We will provide guidance to students and institutions 
over the coming months concerning this regulation.
    Changes: None.

Executive Order 12866

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action. The potential costs associated 
with this regulatory action are those resulting from statutory 
requirements and those we have determined are necessary to administer 
this program effectively and efficiently.
    In assessing the potential costs and benefits of this regulatory 
action--both quantitative and qualitative--we have determined that the 
benefits justify the costs. We have also determined that this 
regulatory action would not unduly interfere with State, local, and 
tribal governments in the exercise of their governmental functions.

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    We summarized the potential costs and benefits of this regulatory 
action in the preamble to the NPRM.

Paperwork Reduction Act of 1995

    These proposed regulations do not contain any information 
collection requirements.

Assessment of Educational Impact

    In the NPRM, we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available. 
Based on the response to the NPRM and on our review, we have determined 
that these final regulations do not require transmission of information 
that any other agency or authority of the United States gathers or 
makes available.

Electronic Access to This Document

    You may view this document in text or Adobe Portable Document 
Format (PDF) on the Internet at the following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/legislation/HEA/rulemaking/
http://ifap.ed.gov/csb__html/fedlreg.htm

To use the PDF you must have the Adobe Acrobat Reader Program with 
Search, which is available free at the first of the previous sites. If 
you have questions about using the PDF, call the U.S. Government 
Printing Office (GPO) toll free, at 1-888-293-6498; or in the 
Washington, D.C., area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://
www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.032 
Consolidation Program; 84.032 Federal Stafford Loan Program; 84.032 
Federal PLUS Program; 84.032 Federal Supplemental Loans for Students 
Program; 84.033 Federal Work-Study Program; 84.038 Federal Perkins 
Loan Program; 84.063 Federal Pell Grant Program; 84.069 LEAP; and 
84.268 William D. Ford Federal Direct Loan Programs)

List of Subjects in 34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Student aid, Reporting and recordkeeping requirements.

    Dated: October 18, 1999.
Richard W. Riley,
Secretary of Education.

    The Secretary amends part 668 of title 34 of the Code of Federal 
Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

    1. The authority citation for part 668 is amended to read as 
follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092, 
1094, 1099c, and 1099c-1, unless otherwise noted.

    2. Section 668.32 is amended as follows:
    A. In paragraph (e)(2), by removing ``or'';
    B. In paragraph (e)(3), by adding ``or'' after the semi-colon;
    C. By adding a new paragraph (e)(4) to read as follows;
    D. In paragraph (h), by removing ``, or in the case of a loan made 
under the FFEL Program, with the lender'';
    E. In paragraph (j), by removing the ``and'' after the semi-colon;
    F. In paragraph (k)(7), by removing ``SSIG'' and adding in its 
place, ``LEAP,'' by removing the period at the end of the paragraph and 
adding in its place a semi-colon, and adding ``and'' after the semi-
colon; and
    G. By adding paragraph (l) to read as follows.


Sec. 668.32  Student eligibility--general.

* * * * *
    (e) * * *
    (4) Was home-schooled, and either--
    (i) Obtained a secondary school completion credential for home 
school (other than a high school diploma or its recognized equivalent) 
provided for under State law; or
    (ii) If State law does not require a home-schooled student to 
obtain the credential described in paragraph (e)(4)(i) of this section, 
has completed a secondary school education in a home school setting 
that qualifies as an exemption from compulsory attendance requirements 
under State law;
* * * * *
    (1) Is not ineligible under Sec. 668.40.
* * * * *
    3. Section 668.38 is amended by revising paragraph (b) to read as 
follows:


Sec. 668.38  Enrollment in telecommunications and correspondence 
courses.

* * * * *
    (b)(1) For purposes of this section, a student enrolled in a 
telecommunications course at an institution of higher education is not 
enrolled in a correspondence course, if--
    (i) The student is enrolled in a program that leads to a 
certificate for a program of study of 1 year or longer, or an 
associate, bachelor, or graduate degree; and
    (ii) The number of telecommunications and correspondence courses 
the institution offered during its latest completed award year was 
fewer than 50 percent of all the courses the institution offered during 
that same year.
    (2) For purposes of paragraph (b)(1) of this section, an 
institution of higher education is one--
    (i) That is not an institute or school described in section 
521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Act; 
and
    (ii) At which at least 50 percent of the programs of study offered 
by the institution during its latest completed award year led to an 
associate, bachelor, or graduate degree.
    (3) For purposes of paragraph (b)(1)(ii) of this section, the 
institution must calculate the number of courses using the provisions 
contained in 34 CFR 600.7(b)(2).
    4. Section 668.40 is added to read as follows:
    Sec. 668.40 Conviction for possession or sale of illegal drugs.
    (a)(1) A student is ineligible to receive title IV, HEA program 
funds if the student has been convicted of an offense involving the 
possession or sale of illegal drugs for the period described in 
paragraph (b) of this section. However, the student may regain 
eligibility before that period expires under the conditions described 
in paragraph (c) of this section.
    (2) For purposes of this section, a conviction means only a 
conviction that is on a student's record. A conviction that was 
reversed, set aside, or removed from the student's record is not 
relevant for purposes of this section, nor is a determination or 
adjudication arising out of a juvenile proceeding.
    (3) For purposes of this section, an illegal drug is a controlled 
substance as defined by section 102(6) of the Controlled Substances Act 
(21 U.S.C. 801(6)), and does not include alcohol or tobacco.
    (b)(1) Possession. Except as provided in paragraph (c) of this 
section, if a student has been convicted--
    (i) Only one time for possession of illegal drugs, the student is 
ineligible to receive title IV, HEA program funds for one year after 
the date of conviction;
    (ii) Two times for possession of illegal drugs, the student is 
ineligible to receive title IV, HEA program funds for two years after 
the date of the second conviction; or

[[Page 57359]]

    (iii) Three or more times for possession of illegal drugs, the 
student is ineligible to receive title IV, HEA program funds for an 
indefinite period after the date of the third conviction.
    (2) Sale. Except as provided in paragraph (c) of this section, if a 
student has been convicted--
    (i) Only one time for sale of illegal drugs, the student is 
ineligible to receive title IV, HEA program funds for two years after 
the date of conviction; or
    (ii) Two or more times for sale of illegal drugs, the student is 
ineligible to receive Title IV, HEA program funds for an indefinite 
period after the date of the second conviction.
    (c) If a student successfully completes a drug rehabilitation 
program described in paragraph (d) of this section after the student's 
most recent drug conviction, the student regains eligibility on the 
date the student successfully completes the program.
    (d) A drug rehabilitation program referred to in paragraph (c) of 
this section is one which--
    (1) Includes at least two unannounced drug tests; and
    (2)(i) Has received or is qualified to receive funds directly or 
indirectly under a Federal, State, or local government program;
    (ii) Is administered or recognized by a Federal, State, or local 
government agency or court;
    (iii) Has received or is qualified to receive payment directly or 
indirectly from a Federally- or State-licensed insurance company; or
    (iv) Is administered or recognized by a Federally- or State-
licensed hospital, health clinic or medical doctor.

(Authority: 20 U.S.C. 1091(r))

[FR Doc. 99-27673 Filed 10-21-99; 8:45 am]
BILLING CODE 4000-01-U